Failing to pay a large tax debt to the IRS can have serious consequences, and it’s important to understand your options and take action to resolve the issue.
Consequences of Not Paying a Tax Debt
Interest and penalties:
The IRS will add interest and penalties to your tax debt, increasing the amount you owe. The interest rate is set by the IRS and is adjusted quarterly, while the penalties can include failure-to-pay and failure-to-file penalties.
The IRS can garnish your wages to collect the debt. This means that a portion of your paycheck will be taken by your employer and sent to the IRS until the debt is paid off.
The IRS can also seize your bank account to collect the debt. This means that the IRS will freeze your account and take the funds to pay off the debt.
A tax lien is a legal claim that the IRS can place on your property, including your home and other assets. A tax lien can make it difficult to sell your property or take out a loan.
In extreme cases, the IRS may pursue criminal charges against you for failing to pay taxes.
Options for Resolving a Tax Debt
The IRS offers several payment plan options, including a monthly installment agreement, which allows you to pay off your tax debt over time. To qualify for an installment agreement, you must have filed all required tax returns and owe less than $50,000.
Offer in Compromise:
An Offer in Compromise (OIC) is an agreement between you and the IRS that allows you to settle your tax debt for less than the full amount owed. The IRS will consider your ability to pay, income, expenses, and assets when evaluating your OIC.
Currently Not Collectible (CNC) status:
If you can’t afford to pay your tax debt, you may be able to have your account placed in Currently Not Collectible (CNC) status. This means that the IRS will temporarily stop collection efforts while you get back on your feet financially. You can even hire top IRS tax settlement companies.
It’s important to act promptly if you can’t pay a large tax debt to the IRS. The longer you wait, the more the debt will increase, and the more difficult it will be to resolve. You can contact the IRS directly to discuss your options, or you can hire a tax debt resolution company to help you negotiate with the IRS and resolve the issue.
In conclusion, failing to pay a large tax debt to the IRS can have serious consequences, including wage garnishment, bank levies, tax liens, and even criminal charges. It’s important to understand your options and take action to resolve the issue, such as enrolling in a payment plan, negotiating an Offer in Compromise or hiring top IRS tax settlement companies, or having your account placed in Currently Not Collectible status.